⚡️ Hey Zeus Fans! Every week we share the latest news in the crypto and tokenized assets industry, with our comments and thoughts on why it’s important to us, and its users! Heres what’s been going on recently:
1. The Current State of Blockchain in Investing Part 2
As the adoption of blockchain gathers pace in the banking, financial services and insurance sector, many experts believe that blockchain technology is still in its early stages. Clients are still trying to determine the positive use of the technology and are learning how to make it useful for their businesses and themselves. So we have decided to write a piece on the current state of blockchain in investing, to help provide more insight to those who may not yet understand the full potential of blockchain technology.
Q: What's the #1 benefit blockchain brings to investing?
The #1 benefit we would point out are security tokens, and how it allows a means of recording ownership of an asset, and representing that asset on a blockchain. This provides numerous benefits to investors, namely the fact that it hedges volatility in the cryptocurrency market by using real-life assets to back cryptocurrency investment opportunities. Being able to record a real-world asset on the blockchain also allows for reduced fees, faster execution times, no need for middlemen, and much more! Hopefully it will allow for investors to see the many benefits it can provide, helping them save time and money.
Q: What's the future of blockchain in investing?
We believe that the future of blockchain in investing will be focused around asset tokenization and security tokens. According to a blockchain study, worldwide spending on blockchain is expected to grow to $11.7B by 2022, and right now around 90% of European and North American banks are exploring the technology of tokenizing assets. However, for startups and institutions looking to get into the industry, they have to overcome the many regulatory hurdles that prevent them from doing so. As long as these regulations become more clear and favourable, then we can definitely see security tokens as the future of blockchain in investing.
2. Arbitrage Trading in Crypto
Arbitrage trading has been around for centuries, and it is finally starting to gain traction in the world of crypto. With cryptocurrency trading still in its infancy stage and markets spread all around the world, there can sometimes be some significant price differences between exchanges in which one can take advantage of.
Now let’s start with the simple questions first, mainly, what is arbitrage trading? Cryptocurrency arbitrage trading allows you to take advantage of those significant price differences, buying a digital asset on one exchange where the price is low and then immediately selling it on another exchange where the price is high. To give an example, imagine shares in a technology company might sell for $40 on the New York Stock Exchange, but are available for $40.10 on the London Stock Exchange. The difference may be small, but quickly bulk buying these shares at the lower price and selling them for a higher price can result in a good profit for those observant traders. Now these same principles can be applied to the cryptocurrency market, just with different assets at play. For example, bitcoin can be listed for a lower price on one exchange compared to another, and one can take advantage of these price fluctuations. Nowadays there are countless cryptocurrency exchanges out there, and there can be significant differences in the prices on offer for digital currencies.
“Such inefficiencies normally arise in regions where crypto is in high demand. One of the most oft-quoted examples is the “Kimchi Premium.” Here, local traders in South Korea ended up paying more for Bitcoin in terms of USD than they would have done in the United States, Europe and even other parts of Asia.”
Now let’s move on to the question everyone is probably wondering, and that is how to actually participate in arbitrage trading. The most basic approach to cryptocurrency arbitrage is known as spatial arbitrage. This involves taking advantage of the different prices for cryptocurrencies quoted on two different exchanges. A trader can take advantage of this by buying a digital asset from one exchange, and selling it on another exchange for a higher price, effectively moving funds from one exchange to another. The next arbitrage method is called cross-border arbitrage, and it is quite similar to the method above. The key distinction however, is how the two exchanges involved in the transaction are situated in different countries. This method can be quite tricky to pull off, as the reason why such price discrepancies may exist is due to the fact that consumers in high-priced countries cannot access the market rate for themselves. The last method for arbitrage trading is known as statistical arbitrage. This is a high tech method that usually involves mathematical models and trading algorithms that capitalize on price differences that exist for the briefest amount of time. Participating in arbitrage trading can sometimes be risky, especially in the high volatile world of cryptocurrency, but if you are good at it then you can create a tidy profit for yourself.
3. The Countries with Most Registered Crypto Exchanges
According to data from a new report by Bitfury’s blockchain analytics platform Crystal, The United Kingdom, United States, Hong Kong and Singapore have the largest number of registered digital currency exchanges. Crystal published it’s report on September 9, in which it created a detailed cross-country bitcoin fund flow analysis for 37 countries for the years 2013-2019. The findings from the report shows that the largest number of registered cryptocurrency exchanges are located in the U.K., the U.S., Hong Kong, Singapore, Australia, and China. The countries with the fewest reported registered exchanges are Argentina, India, Mexico, Russia, and Indonesia. The report also states that almost 10% of all exchanges in the survey do not have a country of registration.
In terms of bitcoin transactions, in 2013, 96% of all bitcoin transferred between exchanges was sent by exchanges located in G20 countries. Fast forward to 2018, and that number has decreased to 70%, meaning many new countries have now entered the mix.
“In 2018, the total volume of bitcoin directly transferred between exchanges was almost $92.6 billion. A total of $65.1 billion was transferred by exchanges from G20 countries, Hong Kong, and Singapore.”
The report also includes many predictions for the future in terms of operating countries, and bitcoin transactions. Crystal predicts that the number of crypto exchanges operating with unknown countries of origin will reduce, as a result of FATF guidelines requiring both an official registration as well as a license to operate. They also predict that the overall percentage of bitcoin transactions sent from unknown exchanges has no stable trend, but after the adoption of the FATF guidelines, the share of exchanges that have unknown countries of registration will significantly reduce.
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